By now, most B2B marketing leaders are well into their planning for 2022, and some of the most important and difficult decisions they will be required to make during the planning process involve the allocation of marketing resources (money, people, time, etc.).
Resource allocation is a challenging part of marketing planning for several reasons. First, regardless of company size, the resources available for marketing are rarely sufficient to enable marketing leaders to do everything they'd like to do. Therefore, choices must be made, and the task for marketing leaders is to deploy their finite resources in ways that will do the most good.
Deciding how to invest limited resources has also become more complex because today's marketing leaders have more options than ever before. The number of marketing channels, techniques and marketing technology solutions has grown dramatically over the past several years.
Resource allocation decisions are further complicated by the need to produce short-term results, while simultaneously laying the foundation for success in the future. Because customer expectations and communication preferences are always evolving, marketing tactics that are highly effective today may be less effective in the future, while tactics and capabilities that aren't important today may become key to future success.
Lastly, resource allocation is challenging because marketing leaders are constantly hearing about new marketing channels, tactics and technologies, all of which are touted as the "next great thing" in marketing.
It's no wonder, therefore, that many marketing leaders say resource allocation is the hardest part of their job.
The 70-20-10 Rule
Fortunately, there's a rule of thumb that marketing leaders can use to address resource allocation challenges. It's called the 70-20-10 rule or sometimes the now-next-new rule, and it's been used for a variety of business purposes. Many companies have used it to manage innovation resources, and Coca Cola reportedly used a version of the rule for years to inform marketing investment decisions.
Here's how the rule works.
The 70 ("Now") - The marketing version of the 70-20-10 rule states that 70% of a company's marketing resources should be devoted to capabilities and programs with a well-established track record of acceptable performance. These will typically include marketing channels, tactics and technologies the company is already using.
The rule doesn't mean that companies should automatically "keep doing what they're already doing." It means marketing leaders should evaluate how well their "bread and butter" tactics are performing and continue investing in those that are delivering acceptable results.
The primary goal of these capabilities and programs is to drive incremental performance improvements in the short term, i.e. the now.
The 20 ("Next") - According to the 70-20-10 rule, 20% of a company's marketing resources should be devoted to emerging marketing channels, tactics and technologies. This category typically includes practices and capabilities that a growing number of other companies are using successfully and that are or may be nearing mainstream adoption.
Investments in this category frequently relate to capabilities that will become critical to a company's success in the near-term future, or next.
The 10 ("New") - The remaining 10% of marketing resources should be devoted to new channels, tactics and technologies that have just appeared on the scene. These investments enable true marketing innovation to occur, but they are also largely untested activities or capabilities. They may or may not produce significant short-term results, but they have the potential to become productive in the intermediate- or long-term future.
As with other rules of thumb, marketing leaders should view the 70-20-10 rule as a guide rather than a precise prescription. The specific percentages in the rule may not be appropriate for every business.
It's also important to recognize that like all business rules of thumb, the 70-20-10 rule is not useful for all resource allocation decisions. For example:
- The rule does not address how resources should be allocated within each major resource category - the 70%, the 20% and the 10%.
- The rule is not designed to guide the allocation of resources between brand building and demand generation activities and programs.
- The rule may not be appropriate if a company's current marketing efforts are significantly underperforming. In those cases, marketing leaders may need to make more drastic changes than the rule would suggest.
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